President Obama’s call for a renewed emphasis on "affordability and value" in assessing colleges and universities pairs those two terms in a way that simultaneously highlights their difference and the degree to which they have become interchangeable in much of the current discourse about higher education. There is a growing consensus within the higher ed community that we need to do a better job of "defining the value proposition" of liberal arts education. There is less agreement, however, about what is meant by "value."
Media reports like the ongoing New York Times series "Degrees of Debt" are quickly solidifying a public perception of the value of an education as a straightforward calculation of a graduate’s future earnings minus cost of attendance. Even if we set aside the compelling arguments one can make for the intrinsic and civic value of a liberal arts education, and stick with an economic cost/benefit analysis, such an equation fails to capture the complex feedback loop that is higher education finance. In particular, it ignores the degree to which value is affected by demand, and demand is affected by many of the very qualities that contribute most significantly to cost.
Three reports that have come out within the last month provide an interesting cross-section of the issues. In early January, a panel discussion at AAC&U on "The Economics of the Liberal Arts College" included the presentation of data from Charles Blaich and colleagues at the Wabash Center of Inquiry in the Liberal Arts claiming that less expensive colleges offer more "bang for the buck" than do higher-priced institutions. On January 10, Moody’s released a report offering a "negative outlook" on the entire higher education sector, citing in particular "weakened pricing power and enrollment pressure." And finally, a study by two University of Michigan economists published by the National Bureau of Economic Research found that, contrary to popular belief, investing in the "consumption amenities" that are so often derided by commentators in fact heightened demand and increased value for less selective colleges — i.e., made economic sense.
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